Mine taxes
By JJ
Friday August 15, 2008 [04:00]
It is encouraging to hear Commissioner General Chriticles Mwansa announce that the Zambia Revenue Authority has collected taxes from mine companies to the tune of K255.6 billion since the new tax regime was introduced.
The question however is: what are finance minister Ng'andu Magande and his friends in Cabinet planning to do in next year's budget? I suggest Pay As You Earn should be reduced in order to relieve the workers who have been in the past heavily taxed due to the undercharging of taxes on mines.
We have all the resources to be a better people.
Labels: BUDGET, MAGANDE, WINDFALL TAX
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ZRA collects K255.6bn from mining companies
By Chiwoyu Sinyangwe
Thursday August 14, 2008 [04:00]
THE Zambia Revenue Authority (ZRA) has collected about K255.6 billion in mine taxes on account of all mining companies in the country complying with the new mining fiscal regime. And ZRA has collected revenue of up to K2.4 trillion in net tax during the second quarter of this year against the target of about K2.2 trillion.
ZRA commissioner general Chriticles Mwansa told journalists yesterday during the end of second quarter media press briefing that the biggest contribution from mining taxes came in from windfall tax which stood at K109.5 billion.
Mwansa explained that the mineral royalty in the review period stood at K70.54 billion of which, K6.39 billion, K29.67 billion and K34.48 billion were collected in April, May and June respectively.
He said the mineral royalty paid so far in the last two months under the new mining fiscal regime had averaged K25.75 billion per month compared to an average of K5.2 billion per month that the mines used to contribute to the treasury in 2007.
"However, other tax returns such as provisional company income tax returns, windfall tax return were due on 30 June 2008," Mwansa said. "To this effect, in July 2008, a total of K255.6 billion was paid in mining taxes of which windfall tax stood at K109.5 billion, company income tax was K105.1 billion and mineral royalty contribution was K41.0 billion."
Asked whether there were some mining companies that were still resisting the new mining fiscal regime, Mwansa said: "The mine have, by and large, complied with the new regime. They have met with us; they have met with government to indicate the effect of that regime.
We intend to continue meeting them to make further clarification should there be failure on their part mines to understand other details involved, but I must say that mine is to implement the law. If the law demands that they mines pay, then I go and effect."
The country's new mining fiscal regime which was introduced on April 1, 2008 caused uproar from the major mining companies who insisted the government maintains the Development Agreements that were in favour of the mining conglomerates operating in the country.
And Mwansa said ZRA collected over K3.179 trillion in gross taxes in the period under review while refunds stood K777.9 billion 24.5 per cent of gross taxes.
Mwansa attributed ZRA's surplus performance to higher tax revenue collection recorded largely under company tax, Pay As You Earn (PAYE), withholding tax, mineral royalty, excise duty and trade taxes.
"After refunds of K777.9 billion, the net tax stood at K2.4 trillion against a target of K2.1 trillion, thereby registering a surplus of K248.8 billion (about 11.6 per cent)," said Mwansa.
Labels: WINDFALL TAX, ZRA
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Govt to earn $415m from mining taxes
By Joan Chirwa and Nchima Nchito
Tuesday August 05, 2008 [04:00]
FINANCE minister Ng’andu Magande has said the government is likely to net the projected US $415 million (about K1.3 trillion) extra income from mining taxes as copper prices remain bullish on international markets. Some mining companies recently made their initial payment of windfall taxes to the government, with Kansanshi Mines declaring a disbursement of US $30 million (approximately K101.2 billion), almost 10 per cent of the projected annual income from the mines this year.
“There is a formula that government came up with in calculating the windfall tax and looking at the current prices of the metal, the Ministry of Finance and National Planning is optimistic that the projected US $415 million in additional revenue from the mines will be collected at the end of the year,” Magande said in an interview. “I am very hopeful that we will get there because we are remaining with a few months before the end of the year.”
The government this year came up with a new tax regime in the national budget, with a projected US $415 million (approximately K1.3 trillion) in additional revenue to the treasury in 2008.
The estimates in terms of the expected additional revenue from new mining taxes is significantly higher compared to what the government has been collecting from the mines through taxes. In 2006, government collected slightly over K35 billion from mineral taxes when other copper rich countries like Chile gained around US $1.7 billion (approximately K6.3 trillion, half of Zambia's national budget) as tax contributions from its 17 largest privately held mines in just one quarter of 2006.
Last year, the government engaged a team of experts to renegotiate development agreements with the mines as part of the process of introducing a new tax regime announced that year, which entailed having royalty taxes pegged at 3 per cent as opposed to 0.6 per cent. It was however noted that even if mining companies were to move to the 2007 tax regime, the country would still not get a fair share from its mineral resources.
It is in this vein that it was decided to have a new fiscal and regulatory regime in the 2008 budget to bring about an equitable distribution of the mineral wealth between the government and the mining companies, a law that effectively took away the muscle of the Development Agreements that mining companies signed with the government at the time of privatizing the mines.
Effective April 1, 2008, mining companies have been paying corporate tax at 30 per cent; mineral royalty tax on base metals at three per cent of gross value; withholding tax on interest, royalties, management fees and payments to affiliates or subcontractors in the sector at the rate of 15 per cent and a variable profit tax of up to 15 per cent on taxable income, which is above eight percent of the gross income.
A windfall tax was also introduced at different price levels for different base metals. For copper, the windfall tax will be 25 per cent at the copper price of US $2.50 per pound but below US $3.00 per pound, 50 per cent at a price for the next 50 cents increase in price and 75 per cent for a price above US $3.50 per pound.
Analysts have forecast continued demand for copper in the short term, a situation that is likely to further push commodity prices upwards from an average trading level of around US $7,900 per tonne. Others predicted that copper prices may reach US $10,000 per tonne in the short term. Higher prices of copper on the international market will lead to increased revenues to the government treasury through the newly implemented windfall taxes imposed on mining companies.
But sources at one of the country’s major mining companies said the windfall tax for the mines did not take into consideration the different operating costs incurred by different mining companies.
“Operating costs should have been taken into consideration when coming up with the windfall tax. It’s a very superficial way of trying to get money and we don’t know how sustainable it is in the long term,” said the sources.
But mines and minerals development minister Dr Kalombo Mwansa said the government expects the mines to obey the new laws as long as they remain in production.
“As long as mining companies continue producing, they will be obligated to pay the new taxes to the government,” said Dr Mwansa.
Labels: MAGANDE, WINDFALL TAX
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Vedanta announces KCM profit decline
By Joan Chirwa
Saturday August 02, 2008 [04:00]
VEDANTA Resources Plc has announced a decline in profits at Konkola Copper Mines (KCM), attributing the slump to the new mining tax regime implemented by the Zambian government last April. Releasing the 2008 first quarter results, Vedanta Resources - which controls a 79.4 per cent stake in KCM - stated that the new mineral royalties being charged at three per cent from the previous 0.6 per cent, coupled with higher operating costs, led to the slump in profits.
First quarter earnings before interest, taxes, depreciation and amortisation declined to US$71.1 million about K248.9 billion compared with US$106.2 million around K371.7 billion gained in the corresponding period last year.
"The decrease in profitability was primarily due to higher costs and higher royalties," Vedanta Resources stated. "Operating costs remained under pressure due to higher manpower costs, higher energy prices and lower production."
Vedanta stated that mine output from the Zambian mines was around 21,000 tonnes, marginally higher than the corresponding period last year and significantly higher than the immediately preceding quarter last quarter of 2007.
"Improving mine output remains a major focus area for us. During the first quarter of 2008, KCM produced 36,000 tonnes of copper cathodes which was lower than the production in the corresponding period last year by about 3,000 tonnes," stated Vedanta.
"However, production volumes are higher than the immediately preceding quarter by about 2,000 tonnes. The production from the tailings leach plant was restricted to 9,000 metric tonnes, which is about 50 per cent of quarterly capacity on account of technical process issues which has now been stabilised."
Labels: KCM, VEDANTA, WINDFALL TAX
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Kansanshi Mines pays $30m tax
Posted on July 25th, 2008
Kansanshi Copper Mine in Solwezi in the North Western Province has paid over $30 million to the Zambian government under the newly introduced windfall tax on mining firms. Finance Deputy Minister, Jonas Shakafuswa said government expects other mining firms to pay their dues. He told ZNBC news that the funds will be channeled towards infrastructure development.
Mr. Shakafuswa said time has come for the local people to benefit from their vast mineral wealth. The windfall tax on mining firms was effected on April 1, this year.
[ZNBC]
Labels: KCM, SHAKAFUSWA, WINDFALL TAX
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Zambia targets copper fortune
By Paul Moss
BBC World Tonight, Zambia
Andrew Hickman sits at his desk and passes over a copy of his company's latest annual report. The tax has been imposed in breach of internationally binding agreements Andrew Hickman, First Quantum Minerals
You do not have to be an accountant to get the basic message: First Quantum Minerals are doing well out of Zambia's copper. It is no great surprise. Demand from China has pushed the price of copper to record levels; it is four times what it was just a few years ago. And with the copper mines' productivity up as well, money is rolling in.
"Since privatisation," Mr Hickman says, "several billion dollars of private investment has gone into Zambia's copper mines.
"It is still a poor country, but people are more prosperous than they were 10 years ago, and that's largely down to new investment in the mining industry."
Uneconomic mining
But the Zambian Government is not convinced that the mining companies have brought enough wealth into the country.
This is one of the poorest in the world, with high unemployment, and low life expectancy.
So last April, to fund its programme of poverty reduction, the Government introduced a series of new and higher taxes on the international companies that come here to mine.
"The tax has been imposed in breach of internationally binding agreements," insists Mr Hickman, "and to a large extent, it's making the mines uneconomic."
Unfit for humans
That may be, but it is wildly popular.
This water is contaminated and mosquitoes breed here, causing malaria
Mwenda Immanuel, trade union activist and volunteer for debt forgiveness campaigners Jubilee
President Levy Mwanawasa's decision to introduce the tax last April was supported by politicians of every ideological hue.
And for those working on poverty reduction, it seems self-evident that the money generated by Zambia's natural resources should be used to make life better for all its citizens.
Mwenda Immanuel, trade union activist and volunteer for debt forgiveness campaigners Jubilee, arranges a trip to the shanty town of Kantolomba, just a few miles from Quantum's copper processing plant.
Many of the people here are clearly malnourished, their homes decrepit and overcrowded. Pigs are bathing in a muddy pool that serves as a water-source for locals.
"This water is contaminated and mosquitoes breed here, causing malaria," Mr Immanuel says emphatically.
"There is no healthcare. The mining companies have to pay more tax to pay for clinics, schools. The Government needs the money for development."
Changed conditions
Mr Immanuel's view is backed by the man regarded by many as the father of Zambia.
Kenneth Kaunda nationalised the mines when he was President. The later decision to reverse this is one he bemoans, and he is convinced that if mining companies are to profit from Zambia's copper, their tax contribution should increase.
"Copper is changing in value, and therefore everything must change," he insists.
"Are we expected to say that what we agreed upon yesterday is valid today?"
Countered with the suggestion that, yes, that is how a contract works, and that if Zambia abrogates the deal, other mining companies will be put off investing here, he merely laughs.
"India wants copper, China wants copper - there's a wide market," he says.
Spooked investors
But others in Zambia are not so sanguine.
The Chamber of Mines has warned it is not only mining companies that will be put off, but that all foreign investors will see the country as high risk if the new tax is imposed as promised.
They also say that copper mines require constant upkeep and upgrading, and that this process will be put in jeopardy as well, if the mining companies are more heavily taxed.
But the Zambian government shows no sign of backing down right now.
And some observers believe its actions as just one sign of a more general movement now spreading through Africa.
"I'm seeing this in Malawi, in Uganda," says Robert Mtong, a political campaigner and seasoned observer of how foreign companies operate in Africa.
"People are asking 'where is the money that belongs to us?' In the Niger Delta in Nigeria, people are asking, 'where is the money that comes from the oil?'
"It's early days yet, but a wind of change is blowing, and it will blow more and more."
Labels: ANDREW HICKMAN, FIRST QUANTUM MINING, WINDFALL TAX
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ZCCM-IH ready to buy shares from mines planning withdrawal
By Joan Chirwa
Friday June 13, 2008 [04:00]
ZCCM-IH will be more than willing to buy shares from companies that want to pull out of Zambia because of the new tax regime, company chief executive officer Joseph Chikolwa has said. But First Quantum Minerals country manager Chisanga Puta-Chekwe said mining companies were not against the new tax regime but the manner in which the law had been implemented, insisting that the government had breached legally binding agreements entered into at the time of investments.
During a discussion on Zambia's new mining sector in Lusaka at the just ended Euromoney Zambia Investment conference, Chikolwa said Zambia had for a long time been at the bottom of taxes for mining companies compared with other mineral rich countries in Africa.
"If some mining companies want to sell their shares because of the new taxes that government has come up with, ZCCM-IH will not hesitate to buy them off," Chikolwa said. "Zambia has been at the bottom in terms of taxes for the mines and that has not benefitted us in any way because copper prices now are very high. "Copper prices are very high, so why are the mining companies complaining?
I am likening the mining companies to farmers who complain when it rains and again complain when it doesn't rain. At the moment, no one expects the mining companies to pack up and go because they have made investments of up to US $3 billion in the sector."
Chikolwa further said none of the mining companies had paid dividends to the government through the Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH).
"The business model that was developed for the mining sector did not work. The mining sector has not paid any dividend to the government through ZCCM-IH, so government's decision to revise mining taxes was in the best interest of Zambians," said Chikolwa.
But Chamber of Mines general manager Frederick Bantubonse said ZCCM-IH was aware of the reasons why mining companies had not paid any dividends to the government.
"The prices of copper went down significantly in 2001. When the price of metals started going up in 2004, mining companies had a backlog of carryover tax loses," Bantubonse said. "We also took advantage of the high prices to invest more in the mines. Dividends were not even declared, not that they were withheld."
The government a month ago implemented the three per cent royalty tax on gross revenue of the mining companies, with an initial collection of K29.7 billion at the end of May.
A windfall tax on copper has also been imposed on the mining companies, with government expecting to raise at least US $415 million (about K1.3 trillion) from mining taxes at the end of this year. Other mineral rich countries such as Chile are taxing the mines at five per cent of their gross revenue with collections of up to US$270 million in copper royalties (approximately K874 billion) only in the first quarter of 2007.
And Puta-Chekwe said the fundamental point was not the rate of taxation but the manner in which the new tax regime has been implemented.
"There was a breach of contract on the Development Agreements (DAs) which were signed between the government and the mining companies," said Puta-Chekwe. "Government abolished the DAs after the amendment of the Mines and Minerals Act last year before discussions could be held with the mines on the new tax regime."
Labels: MINING, WINDFALL TAX, ZCCM-IH
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Govt has started engaging mines on taxes, says Mwansa
By Kabanda Chulu in Kitwe
Tuesday June 10, 2008 [04:00]
STAKEHOLDERS in the mining industry have advised the government to exercise caution on the windfall taxes because Zambia was not the only country benefiting from higher prices of copper. And mines minister Dr Kalombo Mwansa has said the government has started engaging mining companies on the newly imposed mining taxes in order to harmonise the situation.
During the just ended 51st Copperbelt Mining, Agricultural and Commercial show whose theme was: ‘mining and industry delivers while agriculture develops and environment matters’ Mopani Copper Mines chief executive officer Emmanuel Mutati said the mining sector was now playing a pivotal role in areas of foreign exchange earnings, employment creation and positive economic growth recorded in recent years.
He said that if sustained, the positive trend would guarantee the continued economical revival, not only for the Copperbelt, but also for other non mining areas.
“In order for the momentum gained in the mining sector to flourish, government should provide and guarantee a favourable playing field that is presided over by mutual trust,” Mutati said. “But regrettably, government’s recent actions (imposition of windfall taxes) are, in our view and in light of the financial results for April inconsistency with government’s desire to create an ideal investment environment.”
He said Zambia’s major competitor in the region is the DR Congo, which has managed to attract huge investments in the mining sector.
“The mining industry in the DR Congo has attracted foreign direct investment of US $ 9 billion since the end of civil war in 2003 and in comparison Zambia has attracted just over US $ 3 billion since 2000,” said Mutati. “There is need to reposition ourselves if we are to be competitive in the region and we are hopeful that a solution will be found to make Zambia the desired investment destination to keep alive the dreams of the people of Zambia.”
And Copperbelt Show Society chairman, Bill Osborne advised the government to bear in mind that Zambia was not the only country that was benefiting from the higher prices of copper, saying that the DR Congo was also benefiting and their cost of production was lower than Zambia.
Osborne said the government should have introduced mining taxes that could have mitigated costs of production because some mining companies have suspended new projects.
He said the effect of the new tax regime was already being felt in that some new projects have been put on hold in existing mines while some exploration projects have been abandoned.
“This new tax is based on turnover which in turn is based on London Metal Exchange (LME) price of copper and this means that no account is taken of costs of production and the LME price is not the price that most mines sell their copper at because the mines sell forward at a hedge (protected) price and this means that the windfall tax percentage is a lot higher when applied against net profit,” said Osborne.
“The negative effect of the new mining tax regime is being felt by existing mines and those carrying out exploration works and these will have an effect on production levels and employment and may mean that Zambia will have difficult reaching the target of one million tonnes of copper production by 2010.”
And Dr Mwansa said the government was aware that calculation of effective tax rates was still an issue on the part of some mining companies.
“The finance ministry has already started to engage the companies on the matter but the purpose of the new fiscal regime is to enable the companies continue to operate viably while contributing a little more in government revenue for the benefit of Zambians,” said Dr Mwansa.
According to an overview of Copper production during the past 50 years in line, Zambia recorded the highest peak in 1972 when the country produced over 800, 000 metric tonnes and the lowest tonnage production recorded was in the period between 1992 to 1997 when ZCCM consistently produced less than 200,000 metric tonnes.
But due to new investments in the mining sector, copper production was projected to increase to over one million metric tonnes per annum by 2010.
Currently Zambia is producing 650,000 metric tonnes and at the time of privatisation in 2000 the country was producing below 200,000 metric tonnes and during the same period employment in mining has risen from 35,355 to 58,108 in 2007.
Also, contribution of the mining sector to gross domestic product increased from 6.4 per cent in 2000 to 8.4 per cent in 2007.
The increased expenditure on capital investments has also resulted in realising the importance and potential of the Deep mining project in Chililabombwe and the technology to process the `Nkana-Wusakile black mountain' (a huge collection of copper slug that accumulated over years of mining).
Labels: KALOMBO MWANSA, WINDFALL TAX
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Govt has started engaging mines on taxes, says Mwansa
By Kabanda Chulu in Kitwe
Tuesday June 10, 2008 [04:00]
STAKEHOLDERS in the mining industry have advised the government to exercise caution on the windfall taxes because Zambia was not the only country benefiting from higher prices of copper. And mines minister Dr Kalombo Mwansa has said the government has started engaging mining companies on the newly imposed mining taxes in order to harmonise the situation.
During the just ended 51st Copperbelt Mining, Agricultural and Commercial show whose theme was: ‘mining and industry delivers while agriculture develops and environment matters’ Mopani Copper Mines chief executive officer Emmanuel Mutati said the mining sector was now playing a pivotal role in areas of foreign exchange earnings, employment creation and positive economic growth recorded in recent years.
He said that if sustained, the positive trend would guarantee the continued economical revival, not only for the Copperbelt, but also for other non mining areas.
“In order for the momentum gained in the mining sector to flourish, government should provide and guarantee a favourable playing field that is presided over by mutual trust,” Mutati said. “But regrettably, government’s recent actions (imposition of windfall taxes) are, in our view and in light of the financial results for April inconsistency with government’s desire to create an ideal investment environment.”
He said Zambia’s major competitor in the region is the DR Congo, which has managed to attract huge investments in the mining sector.
“The mining industry in the DR Congo has attracted foreign direct investment of US $ 9 billion since the end of civil war in 2003 and in comparison Zambia has attracted just over US $ 3 billion since 2000,” said Mutati. “There is need to reposition ourselves if we are to be competitive in the region and we are hopeful that a solution will be found to make Zambia the desired investment destination to keep alive the dreams of the people of Zambia.”
And Copperbelt Show Society chairman, Bill Osborne advised the government to bear in mind that Zambia was not the only country that was benefiting from the higher prices of copper, saying that the DR Congo was also benefiting and their cost of production was lower than Zambia.
Osborne said the government should have introduced mining taxes that could have mitigated costs of production because some mining companies have suspended new projects.
He said the effect of the new tax regime was already being felt in that some new projects have been put on hold in existing mines while some exploration projects have been abandoned.
“This new tax is based on turnover which in turn is based on London Metal Exchange (LME) price of copper and this means that no account is taken of costs of production and the LME price is not the price that most mines sell their copper at because the mines sell forward at a hedge (protected) price and this means that the windfall tax percentage is a lot higher when applied against net profit,” said Osborne.
“The negative effect of the new mining tax regime is being felt by existing mines and those carrying out exploration works and these will have an effect on production levels and employment and may mean that Zambia will have difficult reaching the target of one million tonnes of copper production by 2010.”
And Dr Mwansa said the government was aware that calculation of effective tax rates was still an issue on the part of some mining companies.
“The finance ministry has already started to engage the companies on the matter but the purpose of the new fiscal regime is to enable the companies continue to operate viably while contributing a little more in government revenue for the benefit of Zambians,” said Dr Mwansa.
According to an overview of Copper production during the past 50 years in line, Zambia recorded the highest peak in 1972 when the country produced over 800, 000 metric tonnes and the lowest tonnage production recorded was in the period between 1992 to 1997 when ZCCM consistently produced less than 200,000 metric tonnes.
But due to new investments in the mining sector, copper production was projected to increase to over one million metric tonnes per annum by 2010.
Currently Zambia is producing 650,000 metric tonnes and at the time of privatisation in 2000 the country was producing below 200,000 metric tonnes and during the same period employment in mining has risen from 35,355 to 58,108 in 2007.
Also, contribution of the mining sector to gross domestic product increased from 6.4 per cent in 2000 to 8.4 per cent in 2007.
The increased expenditure on capital investments has also resulted in realising the importance and potential of the Deep mining project in Chililabombwe and the technology to process the `Nkana-Wusakile black mountain' (a huge collection of copper slug that accumulated over years of mining).
Labels: KALOMBO MWANSA, WINDFALL TAX
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Magande terms PS's mining tax remark speculative
By Chiwoyu Sinyangwe
Tuesday May 27, 2008 [04:00]
FINANCE minister Ng’andu Magande has described as speculative his permanent secretary Emmanuel Ngulube’s statement that the government may not collect the US $415 million in mineral taxes due to power outages. Recently, Ngulube submitted to the parliamentary committee on estimates, that it was highly unlikely that Zambia would rake in the projected US $415 million from mining windfall taxes due to load shedding which he said was negatively affecting production at the mining companies.
However, Zesco Limited managing director Rhodnie Sisala dismissed the statement by Ngulube saying the investments in the mining sector were not affected by the current load shedding.
When reached for a comment, Magande last Saturday said he could not say whether Ngulube’s statement was correct or not as it was made out of speculation.
He said the fact that Zambia Revenue Authority (ZRA) recently announced that it is likely to collect the targeted US $415 million additional revenue from the mines and that major mining companies had paid a mineral royalty tax for the month of April 2008 totaling K29.7 billion at the three per cent rate was an indicator that the government was going to meet its tax target for the mining sector.
“My only comment is that we will not scale down on our target to collect the tax we set for ourselves,” said Magande.
“I can’t say the statement by the PS was correct or wrong but it was based on speculation…what he (Ngulube) was saying was because of the challenges we are facing with electricity, we may achieve our targets or not. So really, I can’t stay that the statement was wrong or correct.”
When reminded that the mining companies where reliably supplied with power by Copperbelt Energy Corporation under the bulk supply agreements and that they were not affected by the load shedding, Magande sad:
“What we are saying is that we will not scale down on our target. Just the other day, ZRA announced that they have actually started collecting the new mining taxes is an indicator that we are on course to collect the tax and meet our target.”
Labels: MAGANDE, WINDFALL TAX, ZESCO
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Sisala dismisses claims of load shedding in mines
By Kabanda Chulu
Saturday May 24, 2008 [04:00]
STAKEHOLDERS have dismissed
finance ministry permanent secretary Emmanuel Ngulube’s assertions that the government may not get the projected US$ 415 million from mining windfall taxes due to load shedding. And Zesco Limited managing director
Rhodnie Sisala said the current load shedding would not affect investments in the mining sector. During submissions to the parliamentary committee on estimates this week, Ngulube said the power outages were a challenge to the government because they would affect production from the mines.
“The projected revenue collections of US $ 415 million from the mining industry for this year many not be achieved because of power outages, therefore, we expect the revenue to reduce,” said Ngulube.
However, when making submissions to the same committee yesterday, Sisala said the mines were not affected by load shedding.
“The mines are not affected by the current load shedding and their investments will not be affected,” said Sisala.
And ATRADE managing director Trevor Simumba explained that Copperbelt Energy Corporation was a reliable supplier of power to the mines even in terms of national power blackouts.
Simumba said most mining companies were customers of Copperbelt Energy.
“Copperbelt Energy is very reliable in supplying power to the mines as was evidenced even during the national blackout when the company managed to import power urgently from DR Congo just to keep the mines in operations,” said Simumba.
Copperbelt Energy has entered into a long-term Bulk Supply Agreement with Zesco Limited that ensures a reliable and effective supply of electricity to the mines.
Copperbelt Energy also has in place four stand-by diesel powered sub stations that could mitigate power outages by generating 80 mega watts of power for the mines.
Labels: EMMANUEL NGULUBE, RHODNIE SISALA, WINDFALL TAX, ZESCO
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Govt affirms cordial relations with mining firms
By Chiwoyu Sinyangwe
Wednesday May 21, 2008 [04:00]
MINES minister Dr Kalombo Mwansa has said the government's relationship with the mining companies in the country has remained cordial despite the new mining taxes. The government introduced new mining fiscal regime which came into effect on April 1 this year. The move resulted in increased mineral royalty to three per cent from 0.6 per cent, while corporate tax on mines rose to 30 per cent from 25 per cent.
The government also introduced a 15 per cent variable profit tax on taxable income above eight per cent and a minimum of 25 per cent windfall profit tax.
The move led to an outcry from mining companies operating in the country which congregated through the Chamber of Mines of Zambia, a cartel of mining companies operating in the country, to denounce the new tax regime.
The mining companies insisted that, by implementing the new mining fiscal regime, the government had abrogated the development agreements that it signed with them.
But Dr Mwansa insisted that the government had clarified with the mining companies and that the new mining taxes were not meant to stifle growth of the sector in the country.
"We still have a cordial relationship with them. Nothing has change. I think they have understood that our reasons to increase the taxes were not meant to hurt them but that we only wanted to get a fair return for our mining sector," said Dr Mwansa. "In fact, we should have been meeting them through their chamber Chamber of Mines of Zambia when we were on the Copperbelt last week for our quarterly meeting but we postponed but we should be meeting them very soon."
Labels: MINING, WINDFALL TAX
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$4bn raised from mine taxes in 2007, says Fundanga
By Edwin Mbulo in Livingstone
Monday April 21, 2008 [04:01]
BANK of Zambia (BoZ) governor Dr Caleb Fundanga has said Zambia last year raised US$4 billion from mine taxes. In an interview at the Royal Livingstone Hotel, Dr Fundanga said Zambia 's mining tax regime was not the worst and praised Konkola Copper Mines (KCM) for accepting the new mining tax regime. Dr Fundanga said there was need to grow the revenue collection from the mines if there was going to be an improvement in the roads, education and health sector.
"We raised US$4 billion from mine earnings last year but we need to grow in the revenue collection. Our mining tax regime is not the worst and we are happy that KCM has accepted the regime, we urge all the other mines to accept the tax regime for us to develop our schools, hospitals and roads," he said.
Dr Fundanga said had Lumwana mines helped to develop the Chingola-Solwezi Road, it would not have been in the current poor state.
"How are we going to repair the roads if they don't pay the tax?" asked Dr Fundanga.
Labels: CALEB FUNDANGA, WINDFALL TAX
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Ad-Valorem Royalty of 3% shines light in dark tunnel
By Professor E. Clive Chirwa
Sunday April 13, 2008 [04:00]
Every Zambian who read the news about the ratification of ad-valorem royalty of 3 per cent by the Parliament jumped into the air with joy as if they have been trebuchetted out of tribulation. This issue involves us all Zambians and friends of Zambia who have for a long time sacrificed our natural resources by giving them away “free of charge” while we plunge deep into poverty, see our infrastructure crumble, education system collapse, health quality demise, and our fiscal policy unable to balance the books as a result end up borrowing when we should not.
The government initiative on increasing copper mines’ taxes is greatly welcomed and I commend all those who participated in its formulation. The salute too goes to all the opposition parties, individuals and institutions that have been airing constructive criticisms.
From the Parliament point of view, this is democracy in action. Thinking this is not a dream, you wonder just how Zambia signed up to the original privatisation agreement. Why didn’t the contracts, which ran to over 20 bulky volumes, never presented to Parliament. These contracts would have been thrown out of Parliament.
The fault is not entirely ours. A lot of blame must also be levelled at the World Bank and its advisers who were on the side of the purchasers and not Zambia. Indeed, in the mid-term, Zambia should take the World Bank to international courts of law and seek compensation for lost revenue based on misappropriated advice that tightly tied Zambia’s negotiating hands and greatly influenced the outcome of the contracts negotiations. A good example is the mischief portrayed by the World Bank when they assured Zambia that some mines that were sold had finite life spans of up to 7 years.
This has now transpired as peddling on untruth since after 7 years, all the mines are in full working order and have long life in them based on the amount of investments. In business, if you are supplied with defective products, the supplier either replaces them, return your money or pays compensation. The advice from the World Band was defective to the core and therefore a call for us to take them to court must be made.
On the part of Rothschild and law firm Clifford Chance who played a major role in advising the government to parcel the mines and smelters into seven entities should have surely known of the raw deal. Why nowhere in all the documentation benefits are mentioned just risks and hazards are flagged out. This is a puzzle. Did these London-based firms know something and did not tell the client, that is, Zambia?
We will know when we go to court. Indeed I have been assured by my very good friends at the London School of Economics and Harvard University in USA that the World Bank and its advisers plus other players have a big case to answer.
If taken to court we will win and we will be compensated for lost revenue. This will not be easy but as it stands it is 90 per cent achievable. With little more effort, we will do it.
For now let us count the eggs in our basket. Therefore, the ad-valorised mineral royalties of 3 per cent that is law from 1st April 2008 shines the needed light in a long dark tunnel.
This is just the genesis of the journey Zambia will take through the dark tunnel as the country heads for that faint shone light at the other end and seeks the exist into prosperity. As the diagram on earnings from mineral royalty shows, Zambia is at the bottom. By moving into 3 per cent corridor, Zambia will still be no better off so to say. The mining outfits will still be paying very little to Zambia in comparison with what mines pay taxes in other countries. Zambia will again be at the bottom and always play a catch up game.
As the government focuses a revenue of US$3.5 billion ( K12.25 Trillion) from copper mining firms, this year’s (April 08 – April 09) contributions will be 3 per cent or US$105 million (K0.37 trillion). Our competitor Chile meanwhile have increased their productivity and will earn US$460 million (K1.61 trillion) that is 5 per cent of US$9.2 billion. This is just above four times Zambia’s take home pay.
Mineral resources in Zambia are our source of revenue and the only money printing machine. If we can maximise our take home pay we will be able to do a lot for our people. Currently as it stands and what will be in the year to come is not good enough to move us out of poverty and into prosperity.
The increase of mineral royalty to 3 per cent will bring into our coffers only K0.37 trillion, while the hard working people of Zambia will contribute about three times that to K1.11 trillion through mainly income tax. Priorities are not right. We tax our people too much. To reduce the tax burden on our citizens we need to further ad-valorise royalties from 3 per cent to 5 per cent as soon as possible and later even more.
The reasons for this thinking can be found in the diagram shown here and on the websites of all mining companies operating in Zambia. For analysis and for clear explanation, I have chosen the parent companies of KCM and Kansanshi/Bwana who are Vedanta Resources and First Quantum Minerals Ltd.
Both of these companies have made enormous investments in Zambia and we say thank you for coming to our rescue when we needed you most. As we were partners at the beginning of this journey, we want to remain partners as revenues have increased. This means sharing the cake fairly with the same spirit that all of us showed when we embarked on this partnership.
From our side we gave you the lowest royalty taxes ever given by any nation on earth of 0.6 per cent. We know we were a laughing stoke of the world, but we bit our pride as we wanted you to grow and stand on your two feet. Now it is your turn to reciprocate the generosity we showed you when we gave you all our natural resources on a golden plate.
If you are humane enough, you will stand up and say “even the 3 per cent you have proposed to us is still below the belt. We can immediately afford 5 per cent. May God bless you Zambia. From our side we will say “you have just saved millions of lives”. But I know you will not have the guts to say it. This is capitalism in a nutshell.
So we have to crack it and force you because your income last year according to your fiscal year annual return 2007 showed that you can afford it. Vedanta Resources from operations in Zambia made net sales of US$1.02 Billion (K3.57 trillion).
After paying Zambia with all the taxes and all the operating costs, Vedanta Resources had a net profit of US$413 million (K1.45 trillion). According to Vedanta Resources website (www.vedantarecources.com) this constituted an increase in profit of 44 per cent on 2006 fiscal year. First Quantum Minerals Ltd on the other hand had a bigger operation in Zambia last year.
The company had net sales of US$1.3 billion (K4.55 trillion). After also paying Zambia with all the taxes and all the operating costs that were reduced by 8 per cent, First Quantum Minerals Ltd pocketed a net profit of US$755 million (K2.65 trillion). Again according to First Quantum Minerals Ltd’s website (www.first-quantum.com) this is 37 per cent up in profit based on the 2006 fiscal year.
Profit taken out of Zambia by these two companies is in the total US$1.168 billion (K4.088 trillion). Is this not excessive profit taken from the vulnerable and poor people?
Can we share based on our initial partnership and gentleman’s agreement and not contracts? We scratched your back when things were tough and gave you 0.6 per cent and it is your turn to scratch ours by at least giving us 3 per cent that will quickly rise to 5 per cent. Dear Zambians, this is how much we are partly losing by not having ZCCM in the driving seat.
Labels: CLIVE CHIRWA, DEVELOPMENT AGREEMENTS, WINDFALL TAX
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Mining companies' arrogance
By Concerned citizen
Friday March 07, 2008 [03:00]
I am simply surprised at the arrogance of the mining companies. I reckon it is the inability of the government to implement the law.
Sovereignty is basically the freedom to create laws and collect taxes on behalf of the people. In this case, the Zambian goernment is not breaking any mining agreement but making a new law which should be followed by any miner, small or large.
Those agreements were under a different tax regime, the fact that the government went to Parliament when introducing the changes means that it is new law and he who does not like it should quit Zambia.
Zambia is a sovereign state because it has Parliament to make laws. If those companies do not pay the new tax, then they cannot and should not be in Zambia.
http://www.postzambia.com/post-read_article.php?articleId=38712
Limos and poverty
By Dr Henry I. Kasongo
Friday March 07, 2008 [03:00]
The Sunday Post of March 2, 2008 on page 6 displayed, under the title 'Levy's visit to Gambia in pictures', pictures of His Excellencys sojourn in Gambia.
I wish to thank Ntembe Mwanawasa for this thoughtful initiative. She would have kept the pictures for herself if she wanted, but she decided to share them with the public.
Only one thing attracted my attention on all the pictures. Is it the president, the first ladies or the crowd? No. My attention went to the Hummer limousine. What an extravagancy in a continent where the majority are poor and jobless!
It is well known that the majority of African families live on less that 1 US dollar per day; and women are the most affected by poverty as they are the ones who fetch food for their families, look after orphans and nurse their sick husbands. Many families in Africa have no access to quality health care, clean water and education.
The prevalence of HIV/AIDS is high; and the number of orphans is increasing on a daily basis.
With this background of poverty in mind, one wonders why some African leaders are so wasteful, or should I say heartless.
Is it necessary to have such a mammoth vehicle for one person (the president of Gambia) and his family and waste tax-payers’ money on the maintenance of such an expensive motorcar while the majority of the Gambian people are suffering and living in a spiral of unemployment?
Things will only be fine in Africa when political leaders behave as responsible managers of their countries’ few resources and when they give more priority to the welfare of their citizens than to entertain their egoistic penchants.
http://www.postzambia.com/post-read_article.php?articleId=38717
'Chiluba sold us to Levy'
By Concerned Citizen
Friday March 07, 2008 [03:00]
Allow me to air my views on the stance that Sata has taken when he argues that Chiluba sold us to Levy.
Which is better between being sold to your local or to the foreigners? It is very fearful that this man whom so many Zambians trust will turn the clock anti-clockwise.
I hope Sata has learnt from his past experience because in many ways, while he worked with Chiluba, he too contributed to the selling of many Zambians together with their properties, either by being active or passively involved.
How can Sata prove that he might not do the same to us? I have come to realise that politicians in Zambia are just using voters for their selfish interests.
Sata is today saying that Chiluba sold us to Levy. But he too, during the Chiluba era, sold our companies to foreign investors through the privatisation process and he indeed held a very high respectable position of minister without portfolio.
Did he not participate in the selling of our property which the KK government acquired ? Can he prove that he will not sell us, together with our belongings to the Taiwanese?
Sata, give us hope and do not use us as a means to meet your ends. Advise your MPs and other officials in PF to pay attention to the promises they gave to the voters prior to the 2006 elections. MMD is now declining in popularity.
They thought upgrading the roads in Kanyama would buy them votes. It turned otherwise. So, I hope you know that words may not buy you votes. We need the implementation of policies, not just words. We are tired of being used by selfish politicians.
Today, its Chiluba. But who knows who's turn it will be tomorrow? Watch your words.
http://www.postzambia.com/post-read_article.php?articleId=38719
Foreign investment
By Concerned citizen
Friday March 07, 2008 [03:00]
The Minister of Labour needs to step down on moral grounds because he has clearly failed to manage the ministry.
The stories of Chinese nationals not respecting Zambian laws must come to an end. The truth of the matter is that these Chinese investors need us more than we need them. We should have a win-win relationship but it seems our government values profits more than human lives.
This is the only country in the world (maybe Iraq too) where foreigners can break the law under the veil of investment. We are tired of seeing our workers fight to earn a decent wage. Foreign investment and economic development are pointless if the ordinary people of Zambia do not enjoy the benefits.
The minister does not need to have inspectors report to him because news of this abuse is in newspapers everyday. Has Mwanawasa sold his soul to the devil that he cannot stand up for his people anymore? What has he promised the Chinese that he cannot dare stand up to them?
We should be equal partners but what I see is a master-slave relationship. The patience of Zambians has been taken for granted for too long. If this is the price we have to pay for foreign investment, then Lord help us.
http://www.postzambia.com/post-read_article.php?articleId=38641
Industrial unrest
By Dr Daniel Maswahu,Cambridge, UK
Thursday March 06, 2008 [03:00]
The industrial unrests that are currently proliferating with the blessings of the MMD government are a cause for serious concern.
I do not believe it is a mere coincidence nor indeed xenophobia that there are riots at mining enterprises under the management of the Chinese. There is no need to open fresh wounds and remind ourselves of the poor industrial safety conditions that Chinese mining enterprises expose their workers to.
The constitution does not provide clear guidelines on a minimum wage and it is little wonder that miners are taking the law into their own hands. These are not mere riots or the grunting of career criminals, but they represent an encroachment on, and a test of the strength of our sovereignty.
There is sufficient demand on the world metal market and Zambia can easily attract investors with a good industrial safety record.
The question therefore is, to what extent can Zambians continue being abused before the government realises their suffering?
Labels: MINING AGREEMENTS, WINDFALL TAX
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Parliament urges govt to increase tax threshold
By Mutuna Chanda
Friday March 07, 2008 [03:00]
THE Parliamentary Committee on Estimates has described as inconceivable government’s proposal of K600,000 as tax threshold and proposed to have it increased to K1 million. And chairperson of the committee Godfrey Beene has expressed concern over the use of the anticipated income from the mining sector after the new tax regime is effected.
Presenting the committee’s report on the proposed Income Tax Amendment Bill of 2008 in which finance minister Ng’andu Magande proposed to increase the tax-free threshold on employees’ incomes from K500,000 to K600,000 and the new mining taxes in Parliament on Wednesday, Beene said the government seemed not to have a criteria on which to base the minimum taxable amount of workers’ incomes.
“Research Mr Speaker, shows that the essential food basket for a family of six in Lusaka currently stands at K1,835,300,” Beene said. “Your committee urges government to move an amendment so as to increase the threshold to at least K1 million.”
But Magande said while many people had advocated a higher increase in the tax threshold, this could not be achieved in a single year.
And Beene urged the government to consult stakeholders including members of parliament over the utilisation of the revenue from the mines.
“Mr Speaker while commending government for this initiative, your committee is concerned about the utilisation of the anticipated income from the mining sector especially that it is not provided for in the 2008 budget,” Beene said.
He however said the new tax regime on the mines should be implemented immediately.
And when the Value Added Tax (VAT) Bill came up for second reading, Beene recommended that the VAT rate be reduced to 14 per cent instead of the proposed 16 per cent.
The government in this year’s budget reduced Value Added Tax rate from 17.5 per cent to 16 per cent.
But Beene said reducing the VAT rate further to 14 per cent would discourage tax evasion, especially at border entry points.
The Customs and Excise Amendment Bill also came up for second reading.
All the three bills passed the second reading and come up today at committee stage.
Labels: 2008 BUDGET, INCOME TAX AMENDMENT BILL 2008, WINDFALL TAX
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IMF cautions Govt over forex inflows
By Chiwoyu Sinyangwe
Tuesday March 04, 2008 [03:00]
GOVERNMENT should not to be excited by increased foreign exchange inflows and overspend but instead enhance its reserves in case of a slump in copper prices, the IMF has cautioned. But commerce minister Felix Mutati has said the Zambian government is “aggressively” pursuing economy diversification to prepare the country for any slump in copper prices.
executive board members who recently visited the country to assess the economic progress the country has made warned that if Zambia did not handle the current economic ‘fortunes’ properly, it would result in “boom and bust cycle that other countries have found themselves in.”
Leader of the IMF mission team Miranda Xafa said in an interview that there was need for Zambia to handle commodity price windfalls prudently and develop infrastructure to avert a possible recession.
"You certainly do not want to get into a boom (and) bust cycle that others have found themselves in, in that while the boom and bust lasts, they try to spend it all at once and while commodity prices fall, they slow down in possible recession- what we call ‘Dutch disease’," Xafa said.
“When the commodity prices go up there is exuberance and a lot of spending and inflation and when the commodity prices go down there is slow down and recession you want to keep a sort of even pace of spending and I am sure you wouldn’t like to go through that.”
Xafa who is also IMF alternate director said there was need to restructure the country’s spending in a manner that dependence on commodity prices was minimised.
“You want to keep a sort of even pace of spending and kind of detach your fiscal spending from the commodity cycle and commodity prices,” Xafa said.
The IMF also cautioned government not to be “over ambitious” when attracting foreign direct investments into the country because the country did not have the infrastructural capacity to handle that growth.
Xafa said the current weakness in electricity supply, coupled with unreliable road and rail network, could result in the country failing to absorb the investments coming into the country.
“I understand there are investors waiting to come in with mining projects and also in other sectors but there is not enough energy right now to service these new requests,” she said. “So, I think, before we can talk about plans to expand production, it is important to remove these bottlenecks.”
And the IMF warned that Zambia’s economy could overheat if government did not prudently expend the increased foreign exchange inflows.
“Now commodities are very high and you are flooded with capital inflows both from exports proceeds and from foreign direct investments in addition to the usual donor inflows,” said Xafa.
“So what I am saying is that as you lay out your spending plans, it is important to take into account the economy’s capacity to absorb the spending because I am sure you don’t want your economy to overheat… you don’t want to bump against resource constraints and you certainly don’t want to have a boom and bust economy.”
But Mutati in a separate interview said the government could not reduce its expenditure because the poverty levels in the country were still too high.
“We are diversifying our economy by encouraging significantly investments in other sectors other than mining, like agriculture, tourism, manufacturing and the industries,” Mutati said.
“We don’t’ hold the fortunes of copper in prices so you have to have other options in case the price of copper does not perform as much it must perform. There are other alternatives that you can actually lean on and that is why we are diversifying our economy so that we have a diversified portfolio both for the export markets as well export potential.”
Mutati also said the Zambian economy was not likely to overheat in the next few years.
“Poverty still remains a major challenge. A lot of our people don’t have access to basic things particularly in rural areas and, in fact, statistics indicate that we are not giving a major dent to rural poverty,” Mutati said.
“So before the economy can overheat we still have to deal with this huge component of poverty and I don’t think the economy can overheat in the next one or two years because the challenge we have got in terms of poverty reduction is quite a lot.”
Mutati also said while the government admitted that the infrastructure in the country was weak, the country could not halt the attraction of foreign investments.
“Yes, infrastructure problems like power issues and road infrastructure still remain a challenge not just for us but the whole region but that is something we trying to address,” said Mutati.
“International Finance Corporation have already been assigned to do a feasibility for development of Kafue lower, and Zesco is interacting with Tata on Itezhi tezhi…so we are determined to address those constraints, we may not resolve it at once but we think it will help address it.
With regard to the road infrastructure in this year’s budget, we have a total of K1.2 trillion to attend to the road infrastructure and this will be a continuous process of dealing with the road infrastructure.
Yes, while it is a constraint we can’t hold back attracting investments until we deal with all these issues because if we do that, the moment we go back and say now we want to bring in the investors they would have looked elsewhere because they are not obviously just waiting for Zambia; they are being spoken to by other countries in the region and other parts of the world.”
Labels: ECONOMY, FELIX MUTATI, FOREX, IMF, WINDFALL TAX
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Mine taxes are reasonable-UNZA don
By KANGWA MULENGA and JERRY MUNTHALI
UNIVERSITY of Zambia (UNZA) School of Mines academic Mathias Mpande says the new mine taxes are reasonable at the current copper prices. Speaking on Radio Phoenix’s “Let the People Talk” programme yesterday, Dr Mpande said there was no need for mine investors to dispute the proposed taxes because they have realised good profits since they bought the mines. Dr Mpande said Zambians have not benefited from the mines under the existing development agreements.
“For instance, Konkola Copper Mines has so far made a profit exceeding US$375 million against the US$40 million purchasing price of Nchanga mine. These new mine taxes should benefit the Zambian people,” Dr Mpande said.
He said the new taxes would help to remove discretion in the way returns on copper sales were being distributed by investors.
Dr Mpande urged Government to be firm and ensure that the new taxes were implemented. Dr Mphande served as Deputy Minister of Mines and Mineral Development under President Chiluba’s administration. He said the implementation of the new taxes would not attract any review of the development agreements.
Speaking on the same programme, Mine Workers Union of Zambia (MUZ) president Rayford Mbulu asked the mine investors to abide by the new taxes. Mr Mbulu said mine investors were making huge profits and so must not resist the new taxes.
He said the proposed taxes were not extraordinary because those were the ones obtaining on the world marke, including in Chile that has a reputation for high copper production.
“Zambians have not benefited from the mines and yet the mine owners have reaped billions of dollars in profits. Zambia must benefit from its mineral resources,” he said.
And Patriotic Front (PF) Nchanga member of Parliament, Wilbar Simusa, said ZCCM Investments Holdings (ZCCM–IH) must be aggressive in the collection of dividends from the mines where it owned shares.
“I am appealing to the ZCCM-IH to change their approach in demanding for dividends and become more aggressive if the people of Zambia are to benefit from the mineral resources God has given Zambia,” Mr Simusa said.
Several callers on the phone-in programme appealed to Government to be more aggressive in ensuring that the new mine taxes were implemented.
Meanwhile, the Bible Gospel Church in Africa (BIGOCA) has called on all Zambians to support the new mining tax regime because the increase from 31.7 per cent to 47 per cent was reasonable.
BIGOCA Overseer, Bishop Peter Ndhlovu, said this in a statement in Lusaka yesterday.
Bishop Ndhlovu said it was clear that foreign investors were not keen on sharing the profits with the people of Zambia in whom God vested the minerals they were extracting.
He wondered why the mining companies suggested a 12.5 per cent in windfall profit tax when the 25 per cent that Government proposed was generally acceptable.
“Effective mining taxes at 47 per cent from 31.7 per cent is reasonable because we have information, which even the investors have not refuted, that some countries charge as high as 52 per cent in effective aggregate taxes,” Bishop Ndhlovu said.
He called on all Zambians with the interest of the nation at heart to back Government on the new tax regime in the mining sector.
“It is yet another mark of greed by our colleagues who want to continue to reap while we watch without thinking about the benefits that should accrue to the owners of the land under which the minerals are extracted,” Bishop Ndhlovu said.
He urged Government not to backtrack on the taxes because the nation needed additional money to construct schools, hospitals, clinics and roads.
Bishop Ndhlovu said the arguments that the foreign investors had put in billions of dollars to expand and upgrade the mines including starting Greenfield mines were well appreciated.
But it had to be noted, too, that no mining firm had recorded any losses in the last five years.
He said Government must ensure that the proceeds from the mines are used prudently.
“It will be very sad to waste the resources after all the trouble we have gone through to make sure that the profits are shared equitably,” Bishop Ndhlovu said.
He proposed a special budgeting process to equitably distribute profits from the copper revenues to all the provinces for viable economic projects.
“People should be consulted in all the provinces to propose projects that will benefit them, be it construction of schools or clinics, so that everyone can benefit in the same way,” he said.
Labels: MATHIAS MPANDE, MUZ, RAYFORD MBULU, UNZA, WINDFALL TAX
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Miyanda urges govt to stop daring mining firms
By Brighton Phiri
Wednesday March 05, 2008 [03:00]
HERITAGE Party president Brigadier General Godfrey Miyanda yesterday asked government to stop challenging the mining companies to go to court over the new mineral tax regime. Commenting on the on-going stand off between the government and the mining companies over the new mineral tax regime, Brig. Gen. Miyanda said it was dangerous for government to rely upon the court to defend its position over the new tax regime.
"Government must desist from using threats of going to court because nobody knows the outcome of the matter that is taken to court," he said. "We can't know who is going to win between government and the mining companies. So far government has lost cases that has cost the country a lot of money such as the Vulture Funds case in London."
Brig Gen Miyanda asked the mining companies to pay what was due to Zambians instead of being stubborn. Brig Gen Miyanda, however, accused government of having contributed to the impasse due to their delay in introducing the mineral taxes.
"I do not support the stand taken by the mining companies but government ought to have taken this matter at least three years ago. It is not good management to introduce taxes on the eve of the budget speech," he said.
He said government had a greater share of the blame over the tax impasse due the manner in which they were playing hide and seek with the mining companies.
Brig. Gen. Miyanda said government could have been mindful of the fact that the mining companies had been implementing their strategies and business plans over the period of seven years during which they enjoyed tax relief.
"To spring up this tax in the 2008 budget, it seems to me that it was an after thought by government. If this had been a well thought out government plan and strategy, it ought to have been introduced for public debate about three years ago to cushion the transition," he said. "Although I don't support the mining companies' stubbornness in refusing to share in the huge profits that they have raked in, I say they have valid grounds for complaining because they have been implementing their strategic business plans based on the past government pronouncements."
He accused the government of being inconsistent and that they often contradicted themselves on their major policy pronouncements.
Brig Gen Miyanda said it was important for government to be predictable to avoid creating uncertainty and instability in the economy.
"There is no need for government to be shy or apologetic when it has made a correct policy statement which seem to ruffle feathers, but to back track in the face of the counter attack of the investors is the sure sign of timidity which eventually undermine the government because the other side becomes aware that government is not sure of itself hence applies pressure," he said. "Lest I may be misunderstood, I agree with President Mwanawasa's statement on his arrival from Madagascar when he said and I quote...at the beginning of my administration I said where there is a conflict between the people of Zambia and something else, the interest of Zambians will be paramount.
I support this without qualification. But criticism is on the inconsistence on the pronouncements. One moment government says the tax regime is non negotiable and the next moment the invite the mining companies for a meeting to come and explain. Just a little pressure from the investors and donors, government gets intimidated and shifts from its resoluteness."
Labels: GENERAL MIYANDA, WINDFALL TAX
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Mine tax defaulters to be fined
By ANGELA CHISHIMBA
MINE companies that fail to pay royalties 14 days after the end of the month in which the sale of the minerals is done will be prohibited from conducting further business outside their mining areas when a bill before Parliament is enacted. This is according to the
Mine and Minerals Development Bill 2008 which was tabled before Parliament by Minister of Justice, George Kunda on Friday. The proposed law will
repeal and replace the Mines and Minerals Act of 1995.
“Where the holder of a mining right fails to pay any royalty payable on or before the due date or any extension thereof allowed by the Zambia Revenue Authority Commissioner General, the Commissioner General may by order served on the holder, prohibit the disposal of any mineral from the mining area concerned until an arrangement has been made that is acceptable to the Commissioner General for the payment of the royalties,” the bill reads.
The bill states that any holder of a mining right who contravenes or fails to comply with an order given commits an offence and shall be liable upon conviction to a fine not exceeding five hundred thousand penalty units or imprisonment for a term not exceeding five years, or both. In the case of a corporate body, it would be liable to a fine not exceeding one million penalty units.
“Where payment of any royalty is deferred, it shall be accumulated with any other deferred payment of royalty which is outstanding and the amount outstanding should be payable when the royalty is due,” the bill states.
It states that holders of large-scale mining and gemstone licences and small scale mining and gemstone licences shall pay a mineral royalty at the rate of three per cent of the normal value of the base metals produced or recoverable under the licence.
The bill is to be tabled in Parliament this week for second reading.
In the 1995 Mines and Minerals Act, a royalty is payable but calculated at two per cent of the market value of minerals, less the cost of smelting, refining and insurance, handling and transportation from the mining area to the point of export or delivery within Zambia.
Royalty payments could be deferred if the cash-operating margin of a holder of a large-scale mining licence falls below zero.
Labels: GEORGE KUNDA, MINE AND MINERALS DEVELOPMENT BILL 2008, MINES AND MINERALS ACT, WINDFALL TAX
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